Exhibit 10.2
EMPLOYMENT CONTINUATION
AGREEMENT
THIS EMPLOYMENT CONTINUATION
AGREEMENT (“Agreement”) is made and entered into
September 22, 2005, by and between CHRISTOPHER &
BANKS CORPORATION, a Delaware corporation (the
“Company”) and JOSEPH E. PENNINGTON
(“Pennington”).
WITNESSETH:
WHEREAS, Pennington and the Company
are parties to that certain Executive Employment Agreement dated as
of March 1, 2002, as amended by that certain agreement dated
September 22, 2005 (collectively, the “Employment
Agreement”); and
WHEREAS, Pennington has been an
employee and officer of the Company; and
WHEREAS, Pennington and the Company
each wish to agree to terms of a continued employment with the
Company for a specified period and the terms and conditions of the
termination of his service as an officer of the Company (including
any and all rights and obligations of the parties under the
Employment Agreement except as outlined herein) and Pennington
desires to release the Company from any and all existing claims,
subject to the terms and conditions stated herein; and
WHEREAS, the Company desires to
provide certain continuation of employment benefits to Pennington;
and
WHEREAS, the Company desires to have
Pennington continue to remain subject to certain nondisclosure
restrictions and nonsolicitation obligations in order to protect
the Company’s legitimate business interests and Pennington is
willing to agree to same; and
WHEREAS, the parties desire to
delineate their respective rights, duties, and obligations, and
desire complete accord.
NOW, THEREFORE, in consideration of
the premises, and the agreements of the parties set forth in this
Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby covenant and agree as
follows:
1.
Recitals . The recitals set forth above are true
and correct in every respect and are incorporated herein by
reference.
2.
Resignations by
Pennington .
Effective as of the close of business on August 31, 2006,
Pennington resigns from his position as President and Chief
Operating Officer, and the Company hereby accepts this
resignation. It is agreed that effective as of the close of
business on August 31, 2006, Pennington has no further
privileges, duties or obligations in such capacity.
EXECUTION COPY - PENNINGTON
3.
Continuation of Employment and
Termination of Employment Agreement .
(a)
Effective as of the close of
business on August 31, 2006, the parties agree that consistent
with Section 2 of this Agreement, Pennington’s position
with the Company as President and Chief Operating Officer, together
with positions as officer and director of the Company’s
subsidiaries, is terminated. Further, effective as of the
close of business on August 31, 2006 and except as otherwise
expressly provided for in this Agreement, the Employment Agreement
is terminated and of no further force and effect and Pennington
relinquishes any and all continuing rights and benefits he may have
under the Employment Agreement. The close of business on
August 31, 2006 shall be referred to as the “Effective
Time” under this Agreement.
(b)
As provided in Section 7 of
this Agreement, Pennington shall nevertheless continue as an
employee of the Company in the capacity described below until the
close of business on February 28, 2008 (the “Termination
Date”). On the Termination Date, Pennington’s
employment by the Company and its subsidiaries shall terminate and,
except as otherwise required by applicable law or as provided for
in this Agreement, Pennington relinquishes all remaining rights and
benefits, if any, he may then have as an employee of the
Company.
4.
Consideration; Continuation of
Compensation and Benefits .
(a)
From September 1, 2006 to the
Termination Date (the “Employment Continuation
Period”), so long as Pennington has not breached any of his
obligations under this Agreement, Pennington shall receive an
aggregate of $360,000, payable at those intervals as the Company
pays its employees.
(b)
During the Employment Continuation
Period, except as provided in Section 4(c) and
4(d) below, Pennington shall not be entitled to any other
compensation or fringe benefits, including but not limited to,
(i) no participation in bonus or incentive programs,
(ii) no eligibility for stock or option awards and
(iii) no car allowance.
(c)
Except as provided in
Section 4(d) of this Agreement, any and all other health
care benefits or payments shall cease on the Termination
Date. After the Termination Date, Pennington and
Pennington’s spouse shall be entitled to continue to be
covered by the Company’s group health insurance plan subject
to the terms of such policy as presently maintained, or as
maintained in the future, as a member of the group, the cost of
which shall be paid by Pennington or Pennington’s spouse,
which coverage shall be continued until eligibility for Medicare
exists for Pennington and Pennington’s spouse.
(d)
In exchange for Pennington’s
agreement to enter into the release set forth in Section 12 of
this Agreement, the Company agrees to (i) employ Pennington
during the Employment Continuation Period and (ii) continue to
pay all the remaining premiums to Allianz Life Insurance Company of
North America under the Future Select Policy (policy number
50044328) in connection with Pennington’s long-term health
care coverage.
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(e)
All base salary payments made to
Pennington pursuant to this Agreement shall be subject to any and
all applicable income tax withholding, FICA taxes and any other
required deductions and withholdings.
5.
Stock Options
. Because Pennington will be
continuing as an employee of the Company during the Employment
Continuation Period, the last tranche of 45,000 options, in
accordance with and subject to the terms of the Stock Option
Agreement dated January 6, 2004 (the “2004 Stock
Option”), is expected to (i) vest in full on
January 6, 2007 and (ii) be exercisable in accordance
with the terms and conditions of the 2004 Stock Option at any time
commencing on January 6, 2007 and ending May 31, 2008
(i.e., three months after the termination of Pennington’s
employment with the Company on the Termination Date).
Further, Pennington’s other outstanding stock options as
reflected on Exhibit A attached hereto shall be
exercisable in accordance with their respective terms and ending on
May 31, 2008. If Pennington’s employment
terminates prior to the Termination Date, (a) any options that
are unvested shall cease to vest and (b) all options must be
exercised within ninety days of such earlier termination
date.
6.
Return of Company Assets and
Property . As
promptly as possible following the Termination Date, Pennington
will return to the Company (1) all Company credit cards in
Pennington’s possession, (2) all keys and security
badges providing access to any of the Company’s facilities
and all Company owned equipment in Pennington’s possession,
and (3) all documents, papers and other Company
information.
7.
Employment During Employment
Continuation Period .
(a)
During the Employment Continuation
Period, and for no additional compensation other than provided in
this Agreement, Pennington shall continue as an employee of the
Company and, as such, shall make himself available to provide such
advice and assistance as the Company may reasonably request during
such period in order to effectuate a smooth transition of
management associated with Pennington’s departure from the
Company on the Termination Date; provided that such services are
expected to consist of a minimum of forty (40) hours a month; and
provided further, the parties acknowledge that such services will
generally consist of those activities set forth on
Exhibit B attached hereto.
(b)
The Company anticipates that the
services to be rendered by Pennington during the Employment
Continuation Period will be performed from Denver, Colorado with
communications provided principally by way of telephone; provided
however, Pennington agrees to provide such services at the
Minneapolis offices of the Company or other locations if requested
to do so by senior executives of the Company and if his reasonable
costs of travel are paid by the Company in accordance with the
Company’s expense reimbursement policies.
8.
Directorship
. Pennington was elected to
serve a three-year term as a director of the Company until the 2008
Annual Meeting of the Stockholders and until his successor has been
duly elected. Pennington agrees to submit his resignation as
a director of the Company at such time as a majority of the
directors elect to request such resignation.
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9.
Governance
. During the Employment
Continuation Period, Pennington shall continue to be bound in all
respects by all applicable provisions of the Company’s
Insider Trading Policy, Code of Business Conduct and Ethics and
Conflict of Interest Policy. Such continuing obligation shall
be in addition to Pennington’s obligation arising under this
Agreement and applicable law.
10.
Property Rights and Use or
Disclosure of Confidential Information; Noncompete and
Nonsolicitation .
Pennington shall continue to be bound in all respects by the
provisions of the Employment Agreement relatin
